Leveson, Crime and Courts Bill and Online publishers, the devil is in the detail – Ashley Hurst

9 04 2013

Leveson ReportThe Leveson amendments to the Crime & Courts Bill could pose a very significant threat to freedom of expression on the internet unless greater clarity in the definitions is achieved. The devil is all in the detail and very careful scrutiny is required to ensure that it does not have unintended consequences.

The implementation of Leveson for online publishers

As everyone knows, the Leveson Inquiry was primarily aimed at the mainstream press. Whilst online issues were covered briefly, they were certainly not scrutinised in any great detail and only 17 pages of the Leveson Report were devoted to them, none of which said anything of great significance. The overriding riding message of Leveson for online publishers was that given their increasing prevalence, they should not be forgotten about or excluded from any new voluntary system of press regulation.

Following Leveson, the focus for online publishers moved to the Defamation Bill and in particular the new clause 7 defence (previously clause 5), which was subject to lengthy debate in the House of Commons and House of Lords. Progress started to be made as the law makers at least started to grapple with the fact that not all bloggers and website operators can be lumped into the same bucket.

But then along came the Puttnam amendments to the Defamation Bill and all the focus then moved away from online publishers as the press, MPs and various campaigners sought to achieve a satisfactory way of implementing Leveson, without threatening the whole Defamation Bill. As is now well documented, that process ended in some late night drafting and negotiation, a Royal Charter, and some amendments to Enterprise Regulatory Reform Bill and the Crime and Courts Bill, which have since passed through the House of Commons and House of Lords without lengthy debate or scrutiny and at break-neck speed.

It was recognised during that process that online publishers ought not to be excluded from the benefits of the apparently low cost arbitration scheme that will be part of the voluntary scheme. However, the carrots that are being dangled at “relevant publishers” to join the scheme are coupled with two very significant sticks for those that do not join the scheme: one-way cost shifting (where the defendant cannot recover its costs even if it wins) and exemplary damages. And these sticks apply to any publisher falling within the definition of “relevant publisher” currently set out in clause 18(1) of the Bill, which will include any person

who, in the course of a business (whether or not carried on with a view to profit), publishes news-related material—

(a) which is written by different authors, and

(b) which is to any extent subject to editorial control.

The requirements of “in the course of business” and “news-related material” will exclude many bloggers but the scope of these requirements is by no means certain. Whilst it would not include this blog, it may well include websites like Mumsnet unless they fall within the “special interest” website definition. It will also certainly apply to Google news and other online news publishers and smaller companies publishing news related material, whether through their own journalism or through aggregation. Yet these companies were not the target of the Leveson Report.

A chilling effect on online expression

In my view, the potential chilling effect comes not so much from threat of exemplary damages (which are likely to be rare) but the clause 17 provisions in relation to costs.  Here it appears that the discretionary one-way cost-shifting procedural rules envisaged by Leveson have somehow metamorphosed into statutory provisions in the Crime and Courts Bill where the starting point is that “relevant publishers” will be liable for claimants’ costs even if they successfully defend claims unless a judge exercises the court’s discretion otherwise.

It is worth being absolutely clear as to what the new Clause 17(3) of Crime & Courts Bill currently says in relation to costs:

If the defendant was not a member of an approved regulator at the time when the claim was commenced (but would have been able to be a member at that time and it would have been reasonable in the circumstances for the defendant to have been a member at that time), the court must award costs against the defendant unless satisfied that –

(a)      the issues raised by the claim could not have been resolved by using an arbitration scheme of the approved regulator (had the defendant been a member), or

(b)      it is just and equitable in all the circumstances of the case to make a different award of costs or make no award of costs.”

In other words, if the defendant publisher loses, it pays all the costs and if it wins it still pays all the costs unless it can successfully argue:

(a)   it was not a “relevant publisher”;

(b)   if it is a relevant publisher, it was reasonable not to join the voluntary scheme (for example, because it was too expensive);

(c)   the dispute could not have been resolved by arbitration (because it fell outside the scope of the scheme); or

(d)   it would not be just and equitable to make such a costs order.

So take Mumsnet as an example. Arguably, although I doubt it was the intention, Mumsnet may fall within the current definition of a “relevant publisher” (clause 18 of the Bill): it publishes news-related material (either its own content or user-generated content); it is written by different authors; it is subject to at least some editorial control (as opposed to monitoring); and it is published in the course of a business. It also doesn’t fit neatly within any of the current exceptions set out in the schedule to the Crime and Courts Bill, although it may be argued that it is a “special interest” website.

Suppose that Mumsnet publishes a news article about a wealthy businesswoman and accuses her of neglecting her children by sending them all off to boarding school. The businesswoman threatens to sue Mumsnet for libel. For argument’s sake, assume that Mumsnet has decided not to join the new voluntary regulator and seeks legal advice as to whether or not to remove the article from its website. The advice is that Mumsnet has a clear defence of honest comment and so Mumsnet decides to leave the article up. The businesswoman then sues and the case goes to trial with £200,000 of legal costs on both sides. Mumsnet wins. As a “relevant publisher” the starting point is that the court must order Mumsnet to pay the lion’s share of £400,000 in costs!

You would hope that a costs judge would not make that order but it would take a brave libel lawyer to advise Mumsnet that at the outset when asked as to whether the article should be removed.

And where is the incentive to settle if the starting point is that the claimant faces no risk as to costs if he loses? The result will surely be an increase in media-related complaints and a refusal of claimants to settle early.

It may be that these consequences are exactly what the drafters had in mind for the traditional media, so as to act as a very significant stick to join the new scheme. However, I am not convinced that they are appropriate for other publishers, particularly small online publishers.

The point is that the chilling effect comes from legal uncertainty. If online publishers and bloggers falling within the relevant publisher definition face the risk of adverse costs orders even if they win (not to mention possibility of exemplary damages in extreme cases), they will simply remove material upon complaint. It simply wouldn’t be worth taking the risk.

Is this what Leveson intended? I doubt it. As Gill Phillips pointed out on this blog, this is what Leveson said about one-way costs shifting:

“6.8 Equally, however, if a publisher did not join the regulator, with the result that the specialist arbitral system was not available to a claimant wishing to pursue a remedy (particularly if of limited means and, thus, unable otherwise to obtain access to justice), I see no reason why the court should not be able to deprive even the successful publisher of costs that would not have been incurred had the alternative arbitration been available. I go further and suggest that, in a case legitimately brought and potentially borderline, the court would even retain the discretion to order the successful publisher to meet the costs of an unsuccessful claimant (although I recognise that this would not be the case if the court was dealing with vexatious or utterly misconceived litigation). Ultimately, the discretion of the court would govern all these issues, …”

6.9 … In the circumstances, I recommend that the Civil Procedure Rules should be amended to require the court, when considering the appropriate order for costs at the conclusion of proceedings, to take into account the availability of an arbitral system set up by an independent regulator itself recognised by law. The purpose of this recommendation is to provide an important incentive for every publisher to join the new system and encourage those who complain that their rights have been infringed to use it as a speedy, effective and comparatively inexpensive method of resolving disputes.” (Leveson Report Vol IV, page 1513, paras 6.8 – 6.9) (Emphasis added)

So the main point made by Leveson is that a successful defendant might not be able to recover his costs if the proceedings could have been dealt with more cheaply by arbitration (one-way costs shifting). But he did go the extra step of suggesting that it might even be appropriate for the defendant to pay the claimant’s costs too if the claim was legitimately brought.  Both types of costs order would be at the discretion of the judge having regard to all the other factors in the case (such as an unreasonable refusal to settle or mediate). Nowhere, and certainly not in his recommendations, does Leveson suggest that the starting point is that the defendant who hasn’t joined the voluntary scheme pays all the costs regardless of the outcome.

This may seem like a minor drafting point but it is not. The additional risk for publishers is significant and when applied to online publishers who do not have the insurance and deep pockets of the large publishing houses, the effect is take-down and a chilling effect on freedom of expression.

The solution

It is therefore the potential for adverse costs orders, not the exemplary damages risk, that is the main stick to punish relevant publishers who do not join the new scheme. But my preference would be that whatever sticks apply to the mainstream press to encourage them to join the new regulator, should not apply to anyone other than the mainstream press (however defined). That means either defining “relevant publisher” more narrowly, for example by reference to criteria such as turnover and readership, or carving most online publishers out of the provisions regarding exemplary damages (currently clause 11) and one-way cost shifting (currently clause 17).

If suitable exclusions for non-mainstream publishers can be agreed, such publishers can simply join the new voluntary system if they want to (i.e. if they are happy to pay the fee and perceive some benefits in the arbitration system) without the draconian consequences of not joining. After all, they were not the primary target of Leveson’s recommendations.

At the very least, the costs provisions in clause 17 should be more discretionary as envisaged by Leveson, such that the loser will at least pay their own costs in most cases.

Ashley Hurst is a Partner in the Commercial Litigation team at Olswang LLP

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3 responses

10 04 2013
Mike Perez

The solution is not, as this article suggests, to leave relevant bloggers out of the system, it is to allow them to join it at minimal or even no cost.

The whole point of Leveson’s arbitral system is to give access to justice to both claimant and defendant at a cost which an ordinary member of the public can afford.

If bloggers remain outside the system they and anyone with a claim against them would be confronted with costs that no normal person can reasonably be expected to meet.

With or without cost shifting, the difference between a litigant’s assessed costs and his solicitor’s bill in a High Court action is many thousands of pounds.

Mumsnet, in the example, should be in the system. This would protect Mumsnet from excessive legal fees. More importantly, it would also protect any member of the public who had a claim against them.

12 04 2013
Simon Carne

I agree with Mike Perez and would go a stage further. Bloggers should be able to join the regulatory regime at the point when a claim materialises. There is no need for thousands of bloggers to sign up to the regulator just in case there is a claim. They should be able to wait until there is an actual claim and, at that point, sign up to the low cost arbitral system.

15 04 2013
Law and Media Round Up – 15 April 2013 | Inforrm's Blog

[...] Leveson, Crime and Courts Bill and Online publishers, the devil is in the detail – Ashley Hurst [...]

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